Effect Assessment of Demand Response on Nodal
Prices by Types of Classes
Nestor Gonzalez Cabrera
Department of Electrical Engineering
Instituto Tecnológico de Morelia
Morelia, Michoacán, México
acapulco1393@yahoo.com.mx
Abstract—This paper evaluates the effect assessment of demand
respond (DR) programs on nodal prices considering customers’
electricity contracts by differentiating multiple types of classes
based on the desired risk level, n-1 and n-2 element outage. Load
elasticity information reported in demand response projects is
adopted to evaluate the dispatchable load reduction due to
dynamic pricing.
I. INTRODUCTION
The evolution of electricity market deregulation provides
opportunities to implement emergent telecommunications
technologies for electric service management. The main focus
is on improving efficiency and service reliability. Real time
prices, continuous monitoring of system components, power
quality monitoring and other services are routinely offered
according to customer needs [1].
In recent years, programs developed for demand
management have been widely applied. [2]. DR is essentially
a derivative product which provides íncentive payments for
reducing consumption relative to consumption scenarios.
There are five basic types of load response: 1) Energy
Efficiency programs reduce electricity consumption and
usually reduce peak demand; 2) Price Response programs
move consumption from day to night (real time pricing or
time of use); 3) Peak Shaving programs require more
response during peak hours and focus on reducing peaks
every high-load day; 4) Reliability Response (contingency
response) requires the fastest, shortest duration response; 5)
Regulation Response continuously follows the power
system’s minute-to-minute commands to balance the
aggregate system. Reliability response (contingency
response) and regulation response specifically target power
system reliability needs and offer the greatest reliability
benefit per MW of load from loads that are capable of
providing these types of response [3].
These programs are required for respond at the
characteristics of the bulk-power system: first the need of
maintaining the balance between generation and demand in
real time and second the need to manage the power flow
The research is supported by Cuerpos Academicos of the Government of
Mexico (ANUIES-PROMEP), and CONACyT.
G. Gutierrez-Alcaraz
Department of Electrical Engineering
Instituto Tecnológico de Morelia
Morelia, Michoacán, México
ggutier@itmorelia.edu.mx
through individual transmission facilities by redispatching
generation and load. These programs have impact on system
reliability and some have more impact than others in the
response of consumers [3]. Obviously some customers will be
more sensitive to changes in electricity prices and thus are
willing to accept a lower level of reliability because they do
not require continuous use of electricity. For this reason, the
service outage for any contingency or any set schedule will
affect both those consumers willing to accept a minimum
level of reliability as well as consumers interested in contracts
based on load reduction (Demand Response).
Consumers who have voluntarily enrolled in demand
management programs help power companies manage when
the grid is under stress. Incentives to participate can be
optimized if the utility can estimate the output power or the
costs of load shedding. The consideration for DR in the off-
period peak is an important piece for reducing the cost of the
expensive fuel and higher prices during peak hours [4] [5] [6].
[7] Proposed to reduce the cost of fuel for the Taiwan
Company, Taipower, with a model based on DR that
restrained expensive fuel usage during off-peak periods.
Another management tool is price-economic dynamics which
has the ability to simplify the improved efficiency of
electricity markets. [8] Has proposed a methodology for
quantifying the benefits to customers and utilities of dynamic
pricing programs (pricing that change in line with patterns of
demand). Another important aspect is the handling of price-
economic dynamics which is receiving great attention in the
industry today because it has the power to simplify the
improved efficiency of electricity markets. Under dynamic
pricing, consumers pay lower prices for everyone, in [9] is
proposed a methodology for quantifying the benefits to
customers and utilities of dynamic pricing programs.
Determining customer response based on an assessment of
nodal prices has been done previously. [10] Investigated the
price uncertainty caused by random failures and customer
response. [11] Proposed a technique to determine nodal prices
and reliability indices on probabilistic evaluation approach
with optimal power flow. [12] Described a model where